The euro's parachute drop has no end in sight

So much for the euro currency holding up well versus the dollar. The euro has plunged 5% in the past month. That's like a 50% move for a stock. Sleepy currencies don't often move that sharply in such quick fashion.

It wasn't that long ago that the euro was hanging in around the $1.30 level. But it's now down near $1.25, having briefly dipped below it Friday morning. Worries about Greece needing to leave the eurozone and bring back its drachma currency have been the main spark for the euro's recent slide.

If the euro is unable to stabilize around $1.25, it's not a huge stretch to think that it could fall below $1.20 and approach the Europe debt crisis low of about $1.18 from the summer of 2010. And that was just the start of the European mess. Nobody was talking Grexit yet.

"A target of $1.18 for the euro might be normal given all the problems. The situation in 2010 is nowhere as bleak as it is now," said Ashraf Laidi, chief global strategist at City Index, a London-based research firm. "There is no more kicking the can down the road."

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And if the euro slips below $1.18? Well, we shouldn't necessarily be talking about the euro achieving a word that rhymes with clarity just yet.

Laidi does not think that a Greek exit from the euro would lead to euro/dollar parity, partly because the European Central Bank and International Monetary Fund might be forced to step in to prevent the rest of Europe from unraveling. In fact, he said that a continued slide for the euro depends more on what happens in the United States.

"Anything below $1.10 would only happen if there is a decent improvement in U.S. fundamentals," said Laidi.

Sure, the dollar looks mighty against the euro right now. But it's all relative. Investors may be seeking safety in the greenback and Treasury bonds on the notion that America's economy is "less bad" than Europe's. But what if next week's jobs numbers are truly dreadful ... say under the 100,000 jobs added in May? That's not likely. But it's not out of the realm of possibility.

Neither are concerns that our nation's least and dimmest in Washington will once again fail to act in the best interests of the nation later this year. Congress seems hell-bent on taking the economy to the edge of the fiscal cliff. Let's hope that they watch where they step or America may go splat like Wile E. Coyote! (For more about the tepid U.S. recovery and other global concerns, watch my Buzz video below.)

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Still, this is not to suggest that the dollar is destined to start sliding against the euro anytime soon. The U.S. still has time (for now) on its side. Europe, on the other hand, not only needs to figure out if Greece is worth hanging onto ... it must also soon decide if it can salvage the euro currency period.

If a Grexit leads to bank runs throughout the continent and even higher interest rates for the likes of Spain, Italy and France, then no amount of German-forced austerity will be able to prevent Europe's nasty cold from turning into a full blown bout of financial pneumonia.

"Greece is not the biggest concern. The biggest concern is that the process has become more dysfunctional.," said Axel Merk, president of Merk Mutual Funds, a Palo Alto, Calif.-based money manager specializing in currency investments. "Bad news is better than no news. Europe doesn't know where it wants to go."

Merk said his funds have been selling euros, mainly due to worries about the lack of tangible progress in solving the continent's many woes. But he added that ripping the Band-Aid off and allowing Greece to leave in a disorderly, chaotic way might be the best thing for Europe in the long-term.

He argues that if Greece gets too much help and still winds up leaving the euro, that might make it easier for the likes of Portugal, Italy and Spain to say "adeus," "ciao" and "hasta la vista" as well. Goodbye euro and welcome back escudos, lire and pesetas!

That would probably be a very bad idea. But there still doesn't seem to be any urgency to try and prevent such a nightmarish scenario from unfolding. Europe is kind of like the Hewlett-Packard (HPQ) or Yahoo (YHOO) of continents. It's still trying to figure out on the fly what the best business model is.

But until it can decide if it really wants to be a true fiscal union -- and that probably means eurobonds no matter how opposed Angela Merkel may be to them -- then Europe (and the euro) will remain in free fall.

The next time the EU has one of its many dinners and summits, somebody needs to pull a Jack Shephard from "Lost" and tell everyone that if they can't live together, they are going to die alone.

Paul R. La Monica is an assistant managing editor at CNNMoney. He is the author of the site's daily column, The Buzz, and also tweets throughout the day about the markets and economy @LaMonicaBuzz. La Monica also oversees the site's economic, markets and technology coverage.